On his website totalwellnessnetwork.com, Dr. Ladd McNamara extols the benefits of network marketing: "20% of all millionaires in the world made their fortune through the Network Marketing system," he writes.

But if 20% of the world's millionaires got that way through multi-level marketing, they also apparently go that way through tax evasion. In a paper titled Who Profits from Multi-Level Marketing? Prepares of Utah Tax Returns Have the Answer, Consumer Awareness Institute President Dr. Jon M. Taylor wrote about his interviews with tax preparers about multi-level marketing:

A manager of H&R Block in northern Utah, told me that during his 25 years of doing over 12,000 tax returns a year between he and his group, they could not remember a single client who had reported a significant profit over any appreciable period of time in MLM! ... And a tax software developer, who dealt with thousands of tax preparers across the country, said he had asked about 100 of them if they had ever seen a profit reported from MLM participation. None had. This was out of a total of over a million tax returns ...

Writing on AllBusiness.com, home-based business guru Frank Ross talks about that special group of people that embraces the idea of a recession:

Everyone's talking the "R" word - Recession in the U.S. There is one headed our way, or depending on who you talk to, there's one already here. Most people fear recession, but one group that doesn't fear it is a handful of successful network marketers. In fact, some of them embrace recession.

It's widely-known that tough economic times are a boon to the recruitment numbers for multi-level marketing companies. But as I discussed last month, this doesn't make sense, assuming that network marketing is a bona fide means of distributing goods.

Here's why: With few exceptions, the products sold by multi-level marketing companies are very expensive compared with similar products distributed through traditional retailers. Network marketing and pyramid scheme expert Jon Taylor compared MLM-distributed products with other comparable products and found that products distributed through MLM are about 5 times more expensive, on average.

Here's my question for Mr. Ross: Why on earth would a recession lead to a new found appetite for premium-priced nutritional supplements and other products commonly distributed through MLMs? As I wrote before, the counter-cyclical nature of the industry would seem to indicate that network marketing success is not about selling products on their merits; it's about getting desperate people to buy products they can't afford in the hope of recruiting others to do the same so they can earn commissions. That's why it follows a completely different economic cycle than conventional product sales.

The post-holiday period is a big time for multi-level marketing recruiting. People are feeling broke from their gift-giving extravagances and, with the housing crisis and general economic malaise, a lot of Americans are looking for additional sources of income.

As Tracy Coenen wrote in this excellent post, network marketing or multi-level marketing is frequently looked to as a potential income source by desperate people, but it's very important that you say no thanks to anyone who tries to pitch you on it.

If you need more convincing, listen to this excellent interview with Consumer Awareness Institute founder Dr. John M. Taylor. And then visit his website MLM: The Truth, and view his list of red flags if you have any doubt about an opportunity you or someone you know is considering.

Hundreds of thousands of Americans get sucked into Multi-Level Marketing (MLM) companies each year. From Mary Kay to Amway to Herbalife to PrePaid Legal, the list is seemingly endless. Each offers its own special spin on the products it sells, but the main focus of an MLM is on recruiting new members.

MLMs live and die by the recruitment of new members, who make the bulk of the product purchases from the company. Little of the product is resold to an actual end user, but the MLM company doesn't care. The sale has been made to the distributor (or associate or representative or member or consultant or whatever term you like).

It's widely knows that those in MLMs make little money. In fact, almost everyone in the pyramid loses money. The real money makers in the scheme are those who own the MLM company. So in the spirit of giving, I'm offering you ten simple steps toward creating your very own MLM. Start yours now and cash in on all those people who are dying to hear about your "opportunity"!

1. Come up with a product or service that you can make sound revolutionary. Funky berry juice, groundbreaking face cream, or unusual financial services will be fine. The only caveat is that you must be able to make it sound like something that's never been done quite this way before. This adds to the mystique.

2. Create a commission structure (also called pay plan, incentives, or rebates) that is difficult to understand, and that pays about 8 to 10 people in an upline as soon as an associate buys something from the company. Ultimately, those in higher levels in the company reap all the rewards, and this is ideal, because it gets everyone on the bottom excited about the "possibilities" and they will recruit their little hearts out.

The holiday season is a time for family... a time for friends... a time for conversation... a time for you to get roped into a "special opportunity."

Did Uncle Bill ever approach you at a gathering of family and friends to tell you he wanted to share an opportunity with you? Or did he walk up to you and say that he had just started his own business? (And you were probably dumbfounded because you couldn't think of any type of business that Uncle Bill was qualified to run.) What about an invitation to come hear a great motivational speaker? Or an invite to a meeting, the substance of which Uncle Bill wouldn't tell you... but he would say that you would be really interested?

All of these are typical come-ons when someone has become involved in a multi-level marketing scheme. They go by different names – MLM, network marketing, dual marketing, direct selling, binary plans, and many others. They'll tell you "this company is different," but it's really not.